Use declines as buying opportunity today: Sukhani

Sudarshan Sukhani of s2analytics.com expects the market to open with a gap down of 50-55 points today due to poor cues from global markets. However, he believes these declines should be used a buying opportunity.

In an interview to CNBC-TV18, Sukhani says that the trend of the market remain up till the Nifty manages to break the 5000 mark on the downside. “The trend changes only if the Nifty goes below 5,000, but one will have to wait for that event that may or may not come about,” he said. Below is an edited transcript of his interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video. Q: Big pullback yesterday but then a poor global picture this morning. How do you approach the Nifty? A: That is the excitement of the market, that it is completely unpredictable. But there is an undercurrent of prediction here also, and that is even though we are in a volatile environment we haven’t broken support levels. I do not know how to overcome this volatility, traders will have to live with it and there is nothing one can do about it. So far the uptrend is intact and we have a view on one side. The trend changes only if the Nifty goes below 5,000, but one will have to wait for that event that may or may not come about. So the view is 50-55 point decline at the open is probably going to be a buying opportunity sometime during the day. Q: Crompton Greaves is a buy in your list? A: Crompton Greaves has been a buy in my list earlier also. It seems that the stock is now bottoming out, making a bullish pattern and going above that pattern. Today, the chances are that most stocks will open lower, so to that extent the levels that we are discussing will change but the trade remains intact. Go long in Crompton Greaves, keep a stop slightly below today’s lows and the chances are the uptrend will continue. Q: You are buying Shree Renuka Sugars as well today? A: Yes. Shree Renuka Sugars has been a complete avoid for many weeks. There is a sense that infrastructure has bottomed out but that cannot be said for sugar stocks but the first signs of base building are visible in Shree Renuka. So it is worth going long into and in spite of the fact that commodities are getting battered everywhere, sugar stocks could begin to move up. Q: Today BHEL is also a buy? A: BHEL is likely to open lower and that should be treated as an opportunity rather than as a threat. So BHEL remains a buy. It’s building a perfect base for anyone wanting to take a two year call on the Indian stock markets; BHEL is an ideal stock to buy and hold. But for short-term traders, it’s breaking out of a head and shoulder pattern and that’s not just BHEL but many stocks are doing that on bullish side. So today’s dip should be used to buy. Do not go overboard and traders are advised to wait and see that the markets are stabilizing but the dips are for buying. Q: How about Cummins India? A: Cummins India is having a bad chart. It rallied and after the rally it was going through a serious period of distribution. We realized that it is a distribution when it starts cracking support levels. Earlier Cummins was in my short selling list earlier and its coming repeatedly. I do not think Cummins is going to outperform the capital goods and certainly not the Nifty. It’s in a downtrend of its own. Cummins qualifies either as a hedge or even as an independent short trade. Q: You are bearish on Jubilant Foodworks? A: I have been bearish earlier and have been proved completely wrong. Jubilant is making distribution patterns that I sense are in the same form as Cummins. But trade is to be short. If this is a risk on environment, in spite of all the mess we are seeing in the world, talking about India, then a lot of FMCG, pharma stocks are going to under perform. It seems that Jubilant could eventually under perform and go down to a deep correction. The charts suggest that the down trend which has just started could accentuate, so we will go short here. Q: You have a buy on LIC Housing Finance? A: Yes and it is an excellent stock. The stock never fell below Rs 200-210, which the support level it made and it has been consistently staying far above it. There is a pattern that breaks out and takes it into new highs for this uptrend. I think that will come about, whether it comes now or later. For position trade, investors, it’s a good stock to be in. Yesterday there were suggestions that this stock is willing to break on the upside but today things will not be the same. But in spite of the opening weakness, I would say watch LIC Housing and if the Nifty stabilises, it is a perfect candidate to buy. _PAGEBREAK_ Q:  It looks like it would be a 1% cut on the Nifty, how do you approach the Index around this 5100 level? A: I would still not be a short seller one reason is we are likely to open 50 points lower. The trade here is still to go long but there is not hurry, the markets will stabilise and if we start taking out the intraday highs which means after the first one hour or so. Then that becomes a buying opportunity for me. My bias so far remains on the long side and the Nifty will have to go below 5000 for that bias to change. Q: Nagarujana Construction (NCC) did well yesterday, where could it be headed? A: It is headed higher to maybe Rs 47 but the problem is that it has seen a significant rally from almost Rs 28 to 40. So the best buying opportunity will come after it pauses and takes some rest and maybe that could happen starting today. Q: Would you say the same of Indiabulls Realty (IBREL)? A: The charts of Indiabulls are better than NCC. The rally we saw in NCC is yet to come in Indiabulls Realty. Indiabulls is just building a base and breaking out. So here there is potential even to buy at current prices. The two real estate stocks that I am track are HDIL and IBREL and both are looking good for much more upside. Q: Your view on Essar Oil? A: Surprisingly Essar Oil has build an excellent bullish pattern, it is now moving up. Yesterday was the first day when it literally bounced up. It was in our buying list earlier. There is significant more upside here. Rs 60 are the modest target but there are chances of it crossing Rs 60. The problem is that yesterday’s big range upward needs to correct or consolidate before traders should get in, that is the question of tactics but the targets are higher.  Q: How about Petronet LNG? A: It was always a favourite and used to give a lot of money on the upside and then it started falling and now it seems decline is over and again there is a basing pattern in Petronet. The chances are it will inch upward or go higher quickly, I don’t know how the pace will be maintained but the trade is on the long side.
I don’t know if some of these stocks are for day trade for example Essar Oil or Petronet, but they are certainly worth taking positions into, if the trader is an overnight trader. Q: Your view on Dishman Pharma which has moved up in the last couple of days? A: It has moved up from Rs 40 to Rs 60, so there is more upside. But here again the question is should we buy now after a rally that has taken it 50% higher? – The answer would be it is better to wait for this stock to consolidate or correct or pause a bit. The charts suggest that worst is over for Dishman, so we are looking at higher levels h ere. Disclosure: I have no personal holding in the stocks discussed